Facing a widening financial crisis, Miami leaders are already projecting a $45 million budget shortfall this year that could force the city to deplete its reserves and sell key assets to stay afloat.

Rising costs, slumping property tax collections and ever-growing pension obligations are feeding a meltdown that's now forcing administrators to look for drastic new sources of income not needed since the state took over Miami's books 14 years ago.

Bailing out Greece with taxpayers' money would be deeply unpopular and difficult to sell to voters, but if euro zone countries abandon Greece, economic imbalances within the euro area would grow, and hopes for closer European integration would be dashed.

Yes, slowly but surely it is happening. In a federal notice filed earlier, the DOL and Treasury are soliciting a response on what has been on many investors' minds, namely the process of converting 401(k)s into annuity-like products.

To understand the looming deficits, The New York Times analyzed Congressional Budget Office projections of the budget surplus or deficit for the years 2009-12, President Obama’s current term. The budget office has been making estimates for these years for nearly a decade now. The numbers that appear below are the average annual deficit or surplus for this four-year period.

Zero Hedge recently highlighted the ever increasing Federal outlays on unemployment insurance, leading to questions on whether the true unemployment rate, as indicated by actual cash outlays, may be materially higher than indicated in increasingly dubious governmental reports.

One proposed alternative has been that the Federal government is directly subsidizing standalone states' depleted unemployment insurance trust funds. Using data provided by ProPublica we have been able to confirm that indeed standalone states are for the most part now bankrupt and have no reserves left in their coffers when it comes to funding ever increasing insurance benefits.

U.S. GDP increased 5.7 percent at the end of last year, with more than half of that growth - 3.4 percent - attributable to changes in inventories. This astonishing impact of inventory has ample historical precedent, and the bottom line has terrible implications for 2010.

President Barack Obama's $3.8 trillion budget for the coming fiscal year raises taxes on businesses and upper-income households by $2 trillion over 10 years and cuts spending on programs with considerable political support, but will still leave the nation with $8.5 trillion in added debt over the next decade.

The U.S. taxpayer-funded rescue program set up to save banks from collapse during the financial crisis makes future reckless behavior more likely, the government's bailout watchdog said in a quarterly report.

Following are analysts' comments after U.S. President Barack Obama on Monday projected in his budget for the fiscal year to September 30, 2011 the U.S. budget deficit would soar to a fresh record of $1.56 trillion in 2010.

Active-duty CIA officers are moonlighting as corporate spooks for the big Wall Street firms. One of the companies pimping out these officers even calls themselves “Business Intelligence Advisors,” or “BIA.” Clever, huh?

Energy

Is nuclear power ready for a resurgence? President Obama received standing applause, from both sides of the political aisle, when he called Wednesday in his State of the Union Address for a "new generation of safe, clean nuclear power plants."

After decades as a forgotten commodity, uranium, the radioactive element used as the primary fuel for nuclear power, is hot property again. Agents for companies, many of them government-controlled, are fanning out across the globe to gain access to the powdery, radioactive ore.

The scramble has been set off by the comeback of nuclear power. In the past couple of years countries that for decades had shunned it as an expensive, pariah technology have embraced it anew.

High Country Fabrication of Casper hopes to have plenty of coal-related work in the years ahead, but not necessarily from the extraction end of the industry. "One of the biggest things we're looking at that's on the horizon is not so much coal mines as the coal-gasification technology," company sales manager Jim Jackson said.

A smart-grid project in Ohio will test whether the electricity business will follow the history of computing, with storage moving from center to the edge of the network. Start-up International Battery on Monday said that it has been chosen to supply lithium ion batteries for a community energy storage pilot project run by utility AEP set to go online by the middle of this year.

Professor Clive Hamilton explores the balances being struck between environmental protection and economic growth in the context of the current advice from climate scientists. He also argues that our preoccupation with economic growth is inconsistent with protecting the Earth from severe damage due to global warming.

As part of a $133 million renovation, the Portland General Services Administration is planning to cultivate “vegetated fins” that will grow more than 200 feet high on the western facade of the main federal building, a vertical garden that changes with the seasons and nurtures plants that yield energy savings.

Until just three years ago, the Marcellus was an obscure name for an obscure rock formation in the backwaters of geological research. Not anymore… The tipping point came when Penn State professor Terry Engelder demonstrated that the Marcellus holds as much as 500 trillion cubic feet of natural gas – the equivalent of total US gas consumption for 25 years.

"Bredesen said about 1,363 state workers may be laid off. However, he's hoping to use about $200 million in reserves over the next to years to preserve about 400 of those jobs. He also wants to use reserves to keep in place important services, such as a safety net program for the mentally ill."

"U.S. junk-rated borrowers, holding the bulk of $1.355 trillion in corporate debt maturing in the next five years, may face refinancing challenges if the U.S. economy stumbles, Moody's Investors Service said in a report on Monday.

Most of the debt stems from unprecedented leveraged buyout activity leading up to 2007, before the global credit crisis took hold, the rating company said, noting mega deals from TXU, HCA, First Data, Univision and Freescale.

While debt coming due in the next two years won't pose a great risk, the biggest chunk of speculative-rated debt, some $700 billion worth, comes due between 2012 and 2014."

"WASHINGTON—The Treasury will get $156.3 billion from the Federal Reserve over the next two years after the central bank's huge asset purchases to counter the financial crisis, the White House said Monday.

In its proposed budget, the White House estimated the Treasury should receive $77 billion from the Fed this year and $79.3 billion in 2011, compared to 2009 deposits of $34.3 billion.

"Federal Reserve deposits of earnings with the Treasury will peak in 2011 and start to fall in the out-years as the Federal Reserve plans to wind down its portfolio," the budget said. "

"WASHINGTON—U.S. policy makers should consider raising the amount of money the Federal Deposit Insurance Corp. has on hand to deal with bank failures, the Obama administration said in its fiscal 2011 budget on Monday.

The proposal suggests that the current reserve ratio used by the FDIC—which represents how much the agency has on hand in its deposit insurance fund compared to federally insured deposits—may not be high enough. The current reserve ratio range of 1.15% to 1.5% is "inadequate to handle the unexpected risks and losses that come with a downturn in the economy." "

"In the last year, the FDIC has taken steps to increase its insurance fund, charging banks a one-time special fee of $5.6 billion and calling for a three-year premium prepayment designed to raise $45 billion. Still, bank failures continue at an accelerated pace. In January alone, there were 15 bank failures, ahead of the 2009 pace that resulted in 140 failures. "

"San Francisco's enormous budget deficit for the coming fiscal year has swelled even more in recent weeks due to poor performance by the city's retirement investment accounts and bleak budget news from Sacramento.

The projected deficit for the 2010-11 fiscal year had been $522 million, of which Mayor Gavin Newsom shaved off more than $20 million through his recent midyear cuts. But that small dent has already been negated by news the city must pay $20.7 million more into its retirement system next year than anticipated.

The city planned to contribute 12.1 percent of its total payroll to the retirement system, but the investments are performing so poorly it must instead pay 13.6 percent. "

"CHICAGO, Feb. 2 /PRNewswire-USNewswire/ -- A landmark study released today from Feeding America, the nation's largest domestic hunger-relief organization, reports that more than 37 million people, one in eight Americans -- including 14 million children and nearly 3 million seniors -- receive emergency food each year through the nation's network of food banks and the agencies they serve. The findings represent a staggering 46 percent increase since the organization's previously released study in 2006."

"Neil Barofsky, the man tasked with overseeing the administration of the Troubled Assets Relief Program (TARP), told Congress in a report released Sunday that the bank bailouts have cleared the path to another financial crisis -- potentially even more grave than the 2008 crisis.

“(E)ven if TARP saved our financial system from driving off a cliff back in 2008,” Barofsky wrote, “absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car.”

The special inspector general for TARP added: “It is hard to see how any of the fundamental problems in the system have been addressed to date.” "

"The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market's recovery.

About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency's figures show.

Although the FHA's default rate has been climbing for months and eating into the agency's cash, the latest figures show that the FHA's woes are getting worse even as the housing market shows signs of improvement. The problems are rooted in FHA mortgages made in 2007 and 2008. Those loans are now maturing into their worst years because failures most often occur two to three years after a mortgage is made.

If the trend continues and the FHA's cash reserves are exhausted, the federal government would automatically use taxpayer money to cover the losses -- a first for the agency, which has always used the fees it charges borrowers to pay for its losses. "

"The City of Los Angeles faces an increasingly dire financial picture. L.A.’s chief administrative officer Monday said the city will have to deplete its emergency reserve fund almost completely to remain fiscally solvent this year. He said Los Angeles will also have to lay off hundreds of workers to address its budget deficit next year.

Los Angeles faces a $200 million budget deficit for the fiscal year that ends June 30.

That’s largely because a projected $75 million drop in tax revenues has grown to $185 million. "

"Santa Clara County officials put a price tag on deflation Monday, saying the first statewide reduction in property tax bills since the introduction of Proposition 13 will cost cash-strapped local schools, cities and redevelopment agencies about $70 million in lost revenue.

What's more, if the real estate market slumbers through another year, weighing heavier on property values, the blow could be worse next year.

The result will mean slightly lower tax bills for hundreds of thousands of Santa Clara County property owners. But it adds one more burden for local governments already straining under the weight of a recession and budget grabs from Sacramento.

"People are going to see a reduction in the level of service that's provided," Santa Clara County Assessor Larry Stone said. "This is the perfect storm for local governments.""

"The District's budget deficit for this fiscal year could hit nearly $220 million and double during the next, but D.C. leaders have no cash surplus to play with and cannot borrow more without violating the city's debt cap.

Unlike previous years there is virtually no wiggle room or extra cash to carry the government through another budget cycle, according to documents distributed by Chief Financial Officer Natwar Gandhi during a D.C. Council retreat last week. The District's budget was balanced in fiscal 2009, the newly released Comprehensive Annual Financial Report concluded, but there was nothing left over.

Fiscal 2009 closed Sept. 30 with a $140 million "general fund budgetary surplus," documents show, but that money is already dedicated to a litany of programs. The city actually has reserved $155 million for programs, leaving the fund $15 million short.

This year, the District faces a $17 million revenue shortfall and up to $202.1 million in "spending pressures" -- a gap caused by overspending in various agencies. Among them: fixed costs, such as utilities and rent, could run up to $23.3 million over budget, fire department overtime $5.3 million, non-public tuition $38.4 million, and the Healthcare Alliance $29.5 million. "

"CTA cuts on the Far Northwest Side may not be as draconian as in other parts of the city, but a lot of people will still be "inconvenienced," a sampling of community leaders predicted last week as the doomsday clock ticked toward Feb. 7.

That's when 18 percent of the city's bus service and 9 percent of train service are scheduled be eliminated to help plug up a $300-million deficit in the CTA's budget."

"Feb. 2 (Bloomberg) -- The share of homes vacant and for sale rose in the fourth quarter after banks seized property from borrowers who defaulted on mortgages.

The homeowner vacancy rate increased to 2.7 percent from 2.6 percent in the third quarter, the U.S. Census Bureau said in a report today. There were 2.09 million empty properties on the market, up from 1.99 million, according to the report.

The rate gained even as the number of properties listed with brokers declined because the survey includes bank-owned homes for sale without a realtor. Foreclosures probably will reach 3 million this year, surpassing the record of 2.82 million in 2009, according to Irvine, California-based RealtyTrac Inc.

“The vacancy rate captures all the properties that are being held off the market by banks, so it shows how much excess inventory there really is,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts. "

just to put nuclear power in prespective, at least in my experience...perry nuclear, on lake erie, completed in 85, cost $6 billion...about 4 times as much as equivalent coal generating capacity in the same region...

"The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families."

"In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth."

"While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases." (Reuters Article)

"The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families."

Shell CEO says to scale back on oil sands

Mon Jan 25, 2010 3:42am EST

LONDON, Jan 25 (Reuters) - Royal Dutch Shell (RDSa.L) is slowing its expansion into high-cost Canadian tar sands and will in future focus on exploration, rather than expensive, capital-intensive projects, Chief Executive Peter Voser said in Monday's edition of the Financial Times.

Analysts said the decision to slow oil sands investment was no surprise given Shell's relative inaction in the field in the past year or so but questioned whether Shell could halt a 7-year slide in output with the drill bit alone.

Voser said Shell had scaled down plans to increase tar sands production to 700,000 barrels per day.

"Over the past two years and certainly over the past six to eight months, I've taken the pace out of that because we have enough other growth opportunities," he told the newspaper.

Instead, Shell planned to rely more on conventional oil and gas reserves for future growth, he said, adding that Shell had become better at finding new oil and gas reserves after investing heavily in exploration.

Many oil sands developments were cancelled in the latter half of 2008 as crude prices tumbled from record highs.

2. Is the US Economy Recovering? The announcement that the US GDP grew by 5.7 percent in the 4th quarter of 2009, the fastest growth since 2003, was met by much skepticism in the markets. Oil prices and the equity markets both fell in the wake of the announcement. Despite incessant repetition of the mantra by federal officials that an economic recovery is underway, outside observers remain skeptical that there will be any real growth in the near future.

They point out that the 5.7 percent figure released last week is an advanced or preliminary number that is put out before all the numbers are in and is almost certain to be revised downwards as most other indicators of economic growth – employment, sales, housing, industrial production -- are not showing anything like the advanced GDP estimate for the 4th quarter.

The federal deficit continues to grow rapidly with current federal tax receipts running as much as 10 percent lower than last year. This will result in still larger sales of US debt obligations into a market that is increasingly skeptical of US debt. With Chinese and other foreign purchasers of US securities reducing their holdings, it is likely that the Federal Reserve will have to increase its purchases (monetize) a larger share of the US debt. All this suggests that there may be serious trouble ahead with the advanced 4th quarter GDP report marking some sort of interim high.

State and local government revenues continue to decline, suggesting that substantial layoffs of government employees may be in the offing this year, since only the federal government can cover deficits by printing money.

The effect of all this on oil prices is problematic. Commercial and OECD demand for oil products will probably continue to decline for the foreseeable future. Whether Asian demand for more oil will grow fast enough to offset this decline and lead to higher prices will be the question of the year.

Khan Resources, which holds a 58 percent stake in Dornod, has been looking to renew its licenses for the project, following the Mongolian government's decision to regulate uranium mining.

Dornod has uranium reserves of about 22,000 tons and this amount could be significantly increased with further exploration.

Mongolia's uranium deposits are currently ranked 15th in the world, but are attracting increasing attention as climate change concerns and China's rapid growth spur construction of nuclear power plants worldwide.

As usual, China is very active in attempting to claim remaining resources, and in this case Russia is also pulling out all the stops to get to it first. Let the desperate, frenzied resource rush begin!

just to put nuclear power in prespective, at least in my experience...perry nuclear, on lake erie, completed in 85, cost $6 billion...about 4 times as much as equivalent coal generating capacity in the same region...

Vogtle down in Waynesboro GA was 8.9 Billion if memory serves me right, back in the 80's. I heard 8 Billion over budget. WOW.

"The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families."

"In the 2010 budget tabled by President Barack Obama on Monday, the White House wants to let billions of dollars in tax breaks expire by the end of the year -- effectively a tax hike by stealth."

"While the administration is focusing its proposal on eliminating tax breaks for individuals who earn $250,000 a year or more, middle-class families will face a slew of these backdoor increases." (Reuters Article)